As California demands less plastic in packaging, manufacturers say you’ll pay more

More than two dozen California Assembly Democrats and one state senator sent a letter Wednesday to legislative leaders asking them to delay fees under SB 54, the state’s landmark plastic reduction law, for two years — an eleventh-hour push as the Legislature hurtles toward the end of session.

The letter, addressed to Senate President Pro Tempore Monique Limón and Assembly Speaker Robert Rivas, was signed by 23 Assemblymembers and Sen. Melissa Hurtado. It asks lawmakers to pause fee assessment and collection this year and next, commit to a “reform package” next session, and increase legislative oversight of the program going forward.

The request lands amid a broader fight over how the plastics law is rolling out. Little by little California is demanding that the packages you pick up at your doorstep or at the store contain less plastic. A law Gov. Gavin Newsom signed four years ago aims to phase out 25% of non-recyclable, non-compostable plastic by 2032.

To get there, the state tasked a nonprofit, the Circular Action Alliance, with drafting a plan to meet the state goals. The group estimated the work would cost $17.2 billion over five years – and is asking for a three-year exemption from the source-reduction deadline.

But as the state moves to implement the law, questions are mounting over how the organization calculates the fees producers — and eventually consumers — will pay, and how much oversight the group actually faces.

Industry groups say the price tag for complying with the law could be tens of billions of dollars higher than California originally estimated. An industry-commissioned study found the law could cost consumers three times what the state projected — between $683 and $948 a year, rather than $190.

That means groceries, shampoo bottles and other consumer goods packed in plastic could cost a little more as the law takes effect.

The California Department of Resources Recycling and Recovery, which oversees implementation, declined an interview but said in a written statement that the law puts consumers first and pushes producers to design packaging with recycling in mind.

“Californians are facing rising costs and pollution from increasingly complex packaging that wasn’t designed for the recycling systems local governments, ratepayers, and the state developed and funded over the past four decades,” said CalRecycle director Zoe Heller. “The law’s rollout is a dial, not a switch, giving producers flexibility to redesign packaging, invest in recycling systems, reduce single-use plastics, and make adjustments along the way,” she added.

Watching the watchers

The Circular Action Alliance published its fee schedule in June, spelling out what each producer owes into the system. The fees could add up to more than $10 million for some businesses, according to the Dairy Institute of California. The Dairy Institute is a trade association that represents milk processors and dairy product manufacturers.

But unlike a state agency, the Circular Action Alliance answers to almost no one, said Katie Davey, executive director of the Dairy Institute.

“[The alliance] does not have to go through an audit by the state auditor. They’re not subject to the (California open government law) Brown Act. They’re not subject to public records requests. The Legislature does not approve their budget and does not approve how many employees they need, or how many fees they can charge,” Davey said.

As a private nonprofit, Circular Action Alliance indeed is not subject to the Brown Act or public-records law — but records it submits to CalRecycle or other government entities may be.

CalRecycle must approve its fee schedule and implementation plan, and has the authority to audit the organization’s performance, said CalRecycle spokesperson Lance Klug, who added that the plastics law includes provisions to ensure the group’s budget and fees are appropriate.

The alliance’s role “is not to set California policy,” said its spokesperson, Larine Urbina. “Our role is to implement the framework established by SB 54 under CalRecycle’s oversight.”

Davey said the gap extends to enforcement. Businesses that fall short will face so-called malus fees, which fund bonuses for those that comply. But the Circular Action Alliance hasn’t said what those fees will be.

Shane Gusman, a lobbyist for the Teamsters, which represents hundreds of thousands of California workers, raised similar concerns. “They’re a wholly independent nonprofit organization that has no oversight. That’s part of the problem.” The union backed the plastics law hoping it would boost jobs; Guzman now says the fees could affect workers too.

Shortly after the alliance published its fee schedule, Davey and a coalition of industry leaders — including the California Restaurant Association, the California League of Food Producers, the American Forest and Paper Association and the Print Creative Alliance — commissioned a study disputing CalRecycle’s numbers.

It found CalRecycle’s 2025 estimate of $21 billion in implementation costs, or $190 a year per California household, rests on “idealized assumptions that fail to capture real-world costs and complications the regulations will create.”

The study puts the number somewhere between $35 and $58 billion, rising after the implementation period.

Klug of CalRecycle said the agency’s earlier reports were just estimates. “The actual costs will be determined by producer choices,” he said. “These costs, for example, will reflect the infrastructure needed to recycle materials that producers are choosing to use.”

Agriculture groups push back 

The biggest hurdle for producers is cutting plastic use 25% by 2032 — which state regulators say will require redesigning packaging and shifting toward reusable products, such as dishes at restaurants and paper-based packaging for produce.

Business groups say they support the state’s goals but call the timeline unworkable.

Food safety is one sticking point: alternatives like paper-based containers for berries are less breathable and spoil faster, while heavier glass or cardboard adds transportation costs, said Casey Creamer, president of the California Fresh Fruit Association.

“We just don’t want to force something out and not be able to deliver a fresh, healthy commodity, or create a situation that has more significant or adverse environmental concerns just because we look at plastics and packaging in a silo,” Creamer said.

Environmental groups oppose any pause.

“All of us pay for plastic pollution through higher garbage bills and clean-ups of polluted beaches and waterways, not to mention the damage to our environment and our health,”said Nick Lapis, director of advocacy for Californians Against Waste.

Sen. Ben Allen, a Democrat representing coastal Los Angeles County who authored the law, said it’s time plastic producers are held accountable for the waste they produce.

“This 11th-hour Hail Mary is only trying to maintain status quo and avoid due responsibility, throwing years of good-faith negotiations, and affordability and sustainability improvements out the window,” he said in a statement about producers’ efforts to pause implementation of the law.

Businesses pass costs to consumers

Whether the plastics law is actually driving up grocery prices yet is hard to pin down. Creamer said businesses may already be factoring the organization’s planned fees into their prices.

Federal data show grocery prices dipped slightly in July from June, though prices have climbed year over year and that rate is accelerating, said Richard Volpe, a consumer-price expert at Cal Poly San Luis Obispo. Neither the USDA nor the Bureau of Labor Statistics has released August figures, and no data yet isolates the state plastics law’s effect from broader inflation.

Volpe said retailers, who run on thin margins, will eventually pass costs on to consumers — but probably not right away.

“It will not happen overnight,” he said. “And it will still be relatively small, mostly on the order of pennies on the dollar.”

Industry groups warn it will add up.

“If someone’s even on the cusp of food insecurity and they’re looking at $1,000 more a year, that’s pushing them over the food cliff,” said Nate Rose, a spokesperson for the California Grocers Association.

The Teamsters, which backed the plastics law hoping it would boost jobs, now worry the fees could affect workers too.

The law “has been morphed into something that is going to cost California consumers a substantial amount of money at a time when I don’t know if we need to spend thousands more on groceries,” said Gusman, the Teamsters lobbyist. “That also has an impact on the workforce.”